China-trade visit overshadowed by arrests

Updated
July 16, 2009 07:49:00

Federal Trade Minister Simon Crean's visit to China has been overshadowed by the diplomatic stoush over the arrest of four Rio Tinto executives in the country. Nevertheless he says he is making progress on expanding the countries' trade relationship.

PHILLIP LASKER, PRESENTER: The diplomatic stoush over the arrest of four Rio Tinto employees in China has overshadowed Simon Crean's trade mission to the country. It's his second visit in two months and despite the distractions, he says he's making progress on expanding Australia's trade relationship with the country.

A big beneficiary could be the struggling car industry. ABC reporter Tom Iggulden is travelling with the Trade Minister in Wuhan and filed this report.

TOM IGGULDEN, REPORTER: The economic downturn's hit the car industry hard. Auto and parts makers have shed hundreds of jobs and the Government's chipped in millions of dollars to stave off further cuts. With exports to China already propping up the resources sector, Trade Minister Simon Crean is hoping the country's auto sector can perform a similar trick for Australia's car business.

SIMON CREAN, TRADE MINISTER: This is the time to strike because the global, the car industry, is undergoing fundamental global restructuring.

TOM IGGULDEN: The Chinese market is now the biggest in the world as waves of Chinese discard their bicycles in favour of a new car.

It's forecast to make almost 11 million light vehicles this year, exceeding the 10 million expected in the US and the 900,000 or so in Australia. The biggest Chinese car makers are joint ventures with western or Japanese marks like this plant belonging to auto company Dongfeng, which the delegation visited. But as Western and Japanese automakers' power declines in the face of the global downturn, companies like Dongfeng see it as an opportunity to go it alone on the international market

KIM CARR, INDUSTRY MINISTER: They want to concentrate on the creation of indigenous models at the high quality end of the market. That's where we can play a significant part.

TOM IGGULDEN: Industry Minister Kim Carr, who is accompanying Simon Crean on the trade mission, says the Chinese car industry could provide thousands of jobs in Australia. But some industry experts have warned they will be a long time coming - perhaps too late to save some of the Australian parts companies doing it tough.

KIM CARR: One thing that you cannot but be impressed by is the speed at which this country moves.

TOM IGGULDEN: While the Australian delegation is upbeat about the potential for a future relationship, the vice-chairman of Dongfeng is playing his cards closer to his chest.

LI SHAU ZHU, VP, DONGFENG AUTO: We are actively exploring the details of forming a potential partnership in the future.

TOM IGGULDEN: The controversy around Rio Tinto's business dealings in China has not dampened the desire of auto companies to do work here. Whether that's reciprocated on the Chinese side remains to be seen.